TRS: common questions answered

My trust doesn’t pay tax, why should I register it with HMRC?

A trustee has many duties, and one of these is to make sure that the trust’s income and gains are reported to HMRC, and any tax is paid.  But many trustees may be surprised to find out that even some non-taxable trusts must be registered with HMRC’s Trust Registration Service (TRS). 

The requirement to register some trusts with TRS first arrived at our doors in the lockdown days of 2020.  Since then it has expanded to include many more trusts.  There are various reasons why a trust must register. 

The first step in finding out whether the trust must register on TRS is deciding whether it is express or not.  Express trusts are those set up intentionally, with the terms usually set out in a document, for example a deed or a Will. 

All UK express trusts must be registered unless they are specifically excluded.  Many non-UK express trusts must also be registered, for example all those that hold UK land or property, or that have UK resident trustees.

Non-express trusts are those which arise naturally.  The terms may not be written down, and the trustee or trustees may not even intend for form a trust. 

So, I have an express trust.  How do I know if is excluded from the requirement to register?

Any trusts that are taxable must be registered.  But non-taxable trusts that are excluded don’t need to register.  Common excluded trusts include:

• Trusts arising as a result of a court order or legislation,
• Trusts holding assets which are within a registered pension scheme, or life insurance policies,
• Charitable trusts,
• Trusts created by a Will, as long as the estate is wound up within 2 years of the person’s death,
• Property co-ownership trusts, where the legal owners are the same people as those who have the benefit of the property (the beneficial owners),
• Vulnerable beneficiary trusts, and
• Trusts created to set up bank accounts for under 18s.

How do I register my express trust?

There’s a lot of information to gather together before you start the registration process, and what you need depends on whether the trust is taxable or not.  As a bare minimum, you will need any Trust Deed, information on when it was set up, what assets the trust holds and their value, the name of the person who set up the trust, their National Insurance Number and other personal details.  If the beneficiaries are separately named, you’ll need their details too. 

Then you’ll find the link to register the trust on the gov.uk website. 

What if I don’t bother? 

Trusts must be registered within 90 days of being created. HMRC can charge a penalty of £5,000 if the trust isn’t registered.

For taxable trusts, you must tell HMRC that the information held on TRS is up-to-date, or tell them about any changes, every year by 31 January.  You don’t need to report changes to the assets held by the trust.  Again, HMRC can charge a £5,000 penalty is this isn’t done.  

If the trust is not taxable, there is no need to report to HMRC every year.  But you should tell HMRC within 90 days if there are any changes to the trust, or if the trust becomes taxable.  

If you need help navigating the requirements, please contact Bethan Chant at bethan.chant@theburnsidepartnership.com.